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Get yourself in shape and bank on some help

If you tighten your grasp on the purse strings you could hamper your recovery and miss out

While trading conditions were tough for many fashion retailers in 2009, we witnessed many firms adapting their businesses to cope with the tough times, placing an increased emphasis on sensible planning and realistic management. Looking forward to 2010, this means we will see leaner and more flexible businesses emerging.

HSBC’s Business of Recovery report identifies that a key area retailers need to be aware of in 2010 is their approach to funding and finance. It found that just 8% of retailers are looking for finance, suggesting that many plan to fuel growth themselves. It’s an approach that warrants caution; in a sector dependent on consumer demand, taking personal risks with funding business growth could have expensive consequences.

We are urging businesses to take stock this year: to talk to their banks to ensure they make the most of future opportunities. The misconception still exists that banks aren’t lending to businesses, but this is simply not the case. The European Central Bank concurs, stating that 70% of businesses trying to access finance across Europe are currently able to do so.

Before seeking funding, retailers need to examine their own businesses to ensure they are in a position to get the support they require. Banks are likely to support companies with good cash flow management, a strong balance sheet, a sound business plan, a well balanced management team and a good banking record.

HSBC’s message to retailers this year is clear: if you tighten your grasp on the purse strings at the expense of investment, you could hamper your recovery and miss out on opportunities to grow. Now is the time to revisit financial plans, consider trading internationally, and ensure that business models are fighting fit for recovery.

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